If the Returns of Two Assets Are Perfectly Positively Correlated

question 50

Multiple Choice

If the returns of two assets are perfectly positively correlated, an investor who puts half of his/her savings into each will:

• A) reduce risk.
• B) have a higher expected return.
• C) not gain from diversification.
• D) reduce risk but lower the expected return.

---

Definitions:

Active Voice

Active voice is a sentence construction where the subject performs the action stated by the verb, focusing on who is doing the action.

First Drafts

The initial versions of a written document or creative work, which are usually revised and edited to improve clarity, structure, and content.

Publishing Company

An organization that is in the business of producing and distributing books, journals, magazines, or digital content to the public for reading.

Topic Sentences

Sentences that express the main idea of a paragraph and give the reader a clear indication of what the section will discuss.